Gaming Tax Malaysia

Gambling might be an enjoyable pastime for some and it might provide a nice adrenaline rush when you win, but your winnings are subject to federal income tax, and possibly to state taxes as well. The IRS requires that you report the money as income, although it does allow you to claim a deduction for at least some of your losses.

• Gaming Tax Act 1972 Malaysia
• Gaming Tax Hike Malaysia
• Gaming Tax Malaysia Contact
• Gaming Tax Malaysia Latest
• Gaming Tax Malaysia Budget 2019
• Gaming Tax Malaysia Budget 2020

• Written law in Malaysia involving betting, sweepstakes, lotteries, gaming machines or games of chance is taxable, and is subject to service tax. SERVICE TAX ON BETTING AND GAMING When Service Tax is Due and Payable 11. The service tax chargeable for gaming activity is based on the following special.
• The service tax on digital services is generally due when payment is received. Businesses in Malaysia that have been charged service tax on digital services provided by a registered FSP are exempt from the reverse charge obligations (i.e., need not self-impose the 6% service tax on imported taxable services acquired from registered FSPs).

There’s the common perception that gambling is illegal in Malaysia, and that’s true to a large extent. There are exceptions, like the casinos up in the Genting Resorts, and the good ol’ Toto, Magnum and Damacai that have licenses granted by the Minister of Finance. Did you also know that illegal gambling dens exist in Malaysia? The police were active in cracking down on these gambling dens at the end of last year. We’ll soon find out that not only can the patrons be charged with a crime, but the owners can be, too.

Now that Chinese New Year is around the corner, we’re pretty sure that there’s gonna be an increase of “chor dai di” playing among family and friends. What are the laws that govern gambling in Malaysia, and can you be arrested for a friendly game of poker in your own home?

There are Malaysian Acts of Parliament specific to gambling

An Act of Parliament basically just means law, in fancy language. The Common Gaming Houses Act 1953 and the Betting Act 1953 deals with illegal gambling in Malaysia, centered around the concepts of “betting houses” and “common gaming houses”. A betting house is where people place bets on things like horsing races or sports events, and organize illegal lotteries. A common gaming house is more relevant to our discussion in this article, because common gaming houses are places that host more “casinolike” games like roulette and poker.

That’s why from now onward, we’ll almost exclusively refer to the Common Gaming Houses Act 1953. Section 3 of the Common Gaming Houses Act 1953 straight up declares these houses as nuisances and are “contrary to the law”. Their existences are not tolerated at all by the authorities.

Section 4 of the Common Gaming Houses Act 1953 sets out offences that relate to owning or occupying the common gaming house. The section has a few subsections, we’re just gonna have a taster here:

4. (1) Any person who— (a) being the owner or occupier or having the use temporarily or otherwise thereof keeps or uses a place as a common gaming house; or

It’s supposed to be a catch-all subsection that is targeted at anyone who might be operating an illegal gambling den. Some examples of offences under section 4 include owning or occupying common gaming houses, and publishing advertisements for the gaming house, and the like. Offenders can be liable for a fine between RM 5,000 and RM 50,000 AND a jail term of up to 3 years, with additional punishment for each gaming machine (like slots or the roulette).

What if the someone doesn’t own a betting house, but is akin to an ‘investor’ of the common gaming house? Section 5 states:

5. Any person who advances or furnishes money for the purpose of establishing or conducting the business of a common gaming house or for the purpose of a public lottery or who profits from the establishment or conduct of such business shall be guilty of an offence...

These investors commit an offence by funneling money into the establishing and the conducting of a common gaming house. Not even people who make or supply gaming machines are spared. Section 4a says that anyone who deals in or manufacturers or assembles gaming machines (it can be gambling equipment, or those gambling arcade machines, or slot machines) commits an offence, and can be punished with a fine between RM 10,000 and RM 100,000 and a jail term of up to 5 years.

It can be difficult to catch gambling dens in action, so to facilitate the process of capturing common gaming houses, Malaysian authorities are allowed to make certain presumptions regarding certain facts. For example, section 19 of the Common Gaming Houses Act 1953 allows the assumption to be made that if a house or a premise has materials that allow for gaming/gambling, and operates as a common gaming house would, it is a common gaming house until proven otherwise. An example would be if a house has a couple of slot machines, a poker table and decks of poker cards, maybe a stash of poker chips, it would be assumed that this house is a common gaming house. It doesn’t have to look straight up like a casino, as long as it looked like gambling was being done, the house or premise may be regarded as a common gaming house.

Now we come to the actual offence of participating in gambling in a common gaming house. According to section 6(1) of the Common Gaming Houses Act 1953, anyone who games in a common gaming house is guilty of an offence, and shall be punished with a fine of up to RM 5,000, a jail term of up to 6 months, or both. Gaming is defined in section 2 as:

Gaming Tax Act 1972 Malaysia

...the playing of any game of chance or of mixed chance and skill for money or money’s worth and includes the playing of any game specified in Column I of the First and Second Schedules and the playing or operation of any gaming machine…

Gaming can mean many of the common gambling games such as poker, blackjack, and roulette, but the First and Second Schedule of the Act has a list that include some of the less commonly known games, like “Tau Ngau” and “Ewok” (Not to be confused with the Ewoks from the Star Wars movies).

It’s also an offence to gamble in public, according to section 7(1) of the Common Gaming Houses Act 1953.

7. (1) A police officer may arrest without warrant any person found gaming in any public place and may seize all instruments or, appliances for gaming found in such public place or on the persons of those arrested under this section.

In fact, the cops can arrest you and your friends without a warrant if you play blackjack in public. They’ll confiscate your deck of cards, too. Anyone liable for gaming in public may be fined up to RM 5,000, imprisonment of up to 6 months, or both. Even if you were gambling without money but other items at stake (maybe a phone, or a watch) or even if you use things to represent money (like peanuts), it still counts, as stated in section 7(3).

You might be wondering if the police need a warrant to search premises or people that they think are common gaming houses or patrons, respectively. They do in fact require warrants to raid suspected gambling dens or gamblers. According to section 16 and 17 of the Common Gaming Houses Act 1953, if a Magistrate, or Justice of Peace or a senior police officer receives written reports of a suspected premise or person, they may make any enquiries that are necessary. These figures of authority may then issue a warrant to enter and search premises, and/or search individuals and seize anything that is connected to gambling.

In addition to the secular laws stated above, the Muslim community in Malaysia are also subject to Syariah law, which is documented in the Syariah Criminal Offences Enactment 1996. These Syariah laws vary from state to state, for example, the Syariah Criminal Offences (State of Penang) Enactment 1996 holds that if a Muslim is caught gambling, they can be subjected to a fine up to RM 3,000, imprisonment of up to 2 years, or both. In Pahang, a Muslim’s mere presence in a place for gambling warrants the same punishment.

There are minor differences in each state’s Syariah enactments on gambling, and each state has an Islamic Religious Affairs Department, whom among other agencies, enforces Syariah law. Even Muslim tourists are subject to these laws.

It’s still gambling if you do it at home

Gaming Tax Hike Malaysia

It might sound weird, but yes, if you and your friends and family play poker at home and there’s money (or other valuables at stake):

1. Your house is technically considered a common gaming house, in that period of gambling
2. You and your friends and family who participated in the poker game that involved money have technically violated section 2
3. Unless you’re using tokens like peanuts for fun and don’t actually exchange them for cash later, you could get into trouble with Section 7(3).

But wait, there’s more! You’re technically not breaking any Malaysian laws if you gamble online, because most, if not all online gambling sites are hosted in other countries. The Home Minister, Datuk Seri Dr Ahmad Zahid Hamidi, said in 2017 that the Malaysian government is trying to set up preventative measures against online gambling.

We’ll leave you with this really interesting piece of trivia. There is one other place than Genting Highlands that has a gambling license, and would you believe it, it’s in Ipoh. The Han Chin Pet Soo was a clubhouse for Hakka Chinese miners and it was kind of like an old timey Zouk but with more debauchery. The clubhouse was known to play host to vices like gambling, prostitution, opium consumption and the triads.

Here’s how you can report illegal gambling

The PDRM have released a list of phone numbers that you can report illegal gambling to, with thanks to our friends over at the Enforcement Agency Integrity Commission for sharing it.

[READ MORE:Malaysian authorities have to investigate if their officers mess up. But what if they don't?]

From 1 September 2018, the Sales and Services Tax (SST) will replace the Goods and Services Tax (GST) in Malaysia.

Here are the details on how the SST works - the registration process, returns and payment of the SST and the transitional measures to take after the abolishment of the GST.

(i)The SST will be a single-stage tax, where the sales ad valorem tax is charged upon taxable goods manufactured and sold by a taxable person in Malaysia and taxable goods imported into Malaysia. Service tax is charged on taxable services provided in Malaysia and not on imported or exported services;
(ii)taxable persons are defined as manufacturers of taxable goods or providers of taxable services with annual turnover exceeding MYR 500,000. A taxable person is also a person who provides taxable services (e.g. hotel, insurance, club, gaming, telecommunication, legal, accounting, architectural, security, etc) in the course of furtherance of business in Malaysia and is liable to be registered or is registered under the Service Tax Act 2018;
(iii)sales tax will be imposed at the rate of 5%, 10% or a specific rate for petroleum products and the service tax will be at the rate of 6%;
(iv)SST returns are required to be submitted on a bi-monthly basis to RMCD (Royal Malaysian Customs Department);
(v)registered persons are required to keep relevant records of SST submissions for a period of 7 years, (a) in Bahasa Melayu or English, (b) in Malaysia except permitted by DG (Director General) to be kept outside Malaysia, and (c) in soft or hard copy;
(vi)where services span over both the GST period and the Services Tax period, the invoicing for the services must be apportioned between the 2 periods (i.e. before 1 September and from 1 September onwards).

SST: The finer details

Registration process for GST and non-GST registered persons

For both GST and non-GST registered persons, the registration for the SST has to be done online through MySST system. Existing GST registrants are automatically ceased to be liable for registration under the GST when the GST Act 2014 is repealed. They are not required to apply for deregistration, but they are required to submit the final GST return within 120 days from the Act being repealed. The existing GST registrants who are automatically liable to be registered under the SST will be informed through a notification letter on the personal/business email starting from 1 August 2018.

Registration done through the MySST system is auto-approved within 24 hours for GST registrants however, if a verification process is required, it may take a little longer. The company can proceed with the voluntary registration provided it is manufacturing taxable goods and is below threshold. If the person is exempt from registration, they can proceed with voluntary registration.

Process to submit Sales Tax returns

Registered manufacturers and persons must declare SST returns (SST-01) every two months according to the taxable period. They may apply to the Director General for a specific taxable period (e.g. in line with the financial year end). SST return has to be submitted no later than the last day of the following month after the taxable period has ended in order to avoid any penalty (10% first 30 days period, 15% second and third 30 days period, 40% after 90 days).
SST returns have to be submitted electronically or by post to SST Processing Centre, and has to be submitted regardless of whether there is any tax to be paid or not.

Transitional considerations

GST registrants are allowed to claim input tax credit within 120 days from when the SST goes into effect. GST registered persons must account for GST at 0% and declare the output tax in their final GST-03 return. Special schemes under GST such as Approved Trader Scheme (ATS), Approved Toll Manufacturer Scheme (ATMS), etc. are not applicable under SST. After 1 September 2018, audits for closure purposes will be carried out on GST registered entities.

Goods and services exempt from payment and facilities under SST

• Exemption on goods and persons
  (i)Goods: e.g. live animals, unprocessed food, vegetables, medicines, machinery, chemicals, etc. List of exempted goods can be found here.
  (ii)Persons:
  (a) Class of person, e.g. Ruler of States, Local Authority, Inland Clearance Depot,
  (b) Manufacturer of specific non-taxable goods, with exemption of tax on the acquisition of raw materials, components, packaging to be used in manufacturing activities,
  (c) Registered manufacturer, with exemption of tax on the acquisition of raw materials, components, packaging to be used in manufacturing of taxable goods.

• Exemption from registration
  Manufacturing activities exempted from registration regardless of turnover, e.g. tailor, jeweller, optician, engraving, vanishing table top, etc.

• Special treatment for specific areas
  Applicable to designated areas such as Labuan, Langkawi and Tioman, and special areas such as Free Zone, Licensed Warehouse, Licensed Manufacturing Warehouse and Joint Development Area.

• Contra System
  A registered person is allowed to deduct the service tax in his return for any cancellation and termination of services or any other reasons as reducing premiums or discounts.

Updated on 20 August 2018

Gaming Tax Malaysia Contact

Service tax – taxable services proposed

On 8 August 2018, the Royal Malaysian Customs Department (RMCD) issued a list of proposed taxable services for service tax purposes. The list also provides a comparison of the taxable services and registration thresholds between the old service tax regime and the upcoming regime. The taxable services are summarised as below.

Gaming Tax Malaysia Latest

Reinstated service providers and services liable for service tax:

• With respect to accommodation providers, night clubs, public houses, beer houses, health or wellness centres, massage parlours, private clubs, golf clubs and driving ranges:
  • all services, including sales of food, drinks and tobacco products
• With respect to restaurant operators, caterers, food court operators, etc.:
  • all services, including prepared or served food or drinks;
  • sales of tobacco products; and
  • sales of alcoholic and non-alcoholic drinks
• With respect to telecommunications and paid television service providers:
  • telecommunications and related services other than the provision of services to other telecommunications providers; and
  • paid television broadcasting services
• With respect to advocates, solicitors and shariah lawyers:
  • legal services and other charges in connection with such services
• With respect to public accountants:
  • the provision of accounting, auditing, bookkeeping, consultancy and other professional services and charges related to such services
• With respect to parking operators:
  • the provision of parking spaces for motor vehicles
• With respect to advertising:
  • the provision of advertising services in Malaysia
• With respect to credit card and charge card service providers regulated by Bank Negara Malaysia:
  • a flat rate of MYR 25 is imposed on the issuance of principal or supplementary cards and every subsequent year or part thereof; and
  • the flat rate is not applicable to fuel cards and charge cards issued in a closed community (i.e. educational institutions or sports clubs)

Newly introduced service providers and taxable services under the new regime

Gaming Tax Malaysia Budget 2019

• With respect to betting and gaming providers:
  • sweepstakes, lotteries, gaming machines or games of chance;
  • tournaments involving betting or games of chance; and
  • conducting or allowing the conduct of card games or any other games by a casino operator
• With respect to transmission and distribution of electricity:
  • electricity provided to domestic consumers for usage of more than 600 kWh (i.e. the first 600 kWh is exempt) for a minimum billing cycle period of 28 days
• With respect to airline operators licensed under the Malaysian aviation regulations:
  • domestic passenger air transport services and all services in connection with such services, with the exception of air transport routes specified under the Rural Air Services Agreement
• With respect to information technology services providers:
  • all types of IT services, excluding sales of goods in connection with the provision of services and provision of IT services outside Malaysia

In general, service providers rendering taxable services are liable to be registered if the total annual amount of taxable services provided exceeds MYR 500,000. The registration threshold is MYR 1,000,000 for restaurant operators, caterers, food court operators, etc.; no registration threshold is imposed for credit card and charge card service providers.

Full details are available on the RMCD's website.

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